U.S. v. Jose
| Decision Date | 07 December 1995 |
| Docket Number | No. 93-17028,93-17028 |
| Parties | -7887, 95 Cal. Daily Op. Serv. 9296, 95 Daily Journal D.A.R. 16,199 UNITED STATES of America; Leslie M. Nishimura, Revenue Agent of the Internal Revenue Service, Plaintiffs-Appellants, v. Laddie F. JOSE, Trustee of Jose Business Trust and Jose Family Trust, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Ninth Circuit |
John A. Dudeck, Tax Division, United States Department of Justice, Washington, D.C., for plaintiffs-appellants.
Benjamin B. Cassiday III, Honolulu, Hawaii, for defendant-appellee.
Appeal from the United States District Court for the District of Hawaii.
Before: KOZINSKI and HAWKINS, Circuit Judges, and SILVER, * District Judge.
ORDER
The Internal Revenue Service appeals the district court's order conditionally enforcing two summonses served on Laddie F. Jose as Trustee of the Jose Business Trust and Jose Family Trust. The IRS challenges the condition of enforcement that requires the Examination Division to give Jose five days notice before disclosing to any other division of the IRS documents produced by Jose. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we dismiss the appeal as not ripe.
The record indicates that the IRS represented to the district court that the documents requested of Jose were for civil tax examination purposes only, not for a criminal investigation. The record does not indicate that the Examination Division has attempted to disclose the documents to any other IRS division, thereby triggering the five-day notice requirement. Thus, any detrimental impact the district court's order may have on the IRS's investigation is, at this time, purely speculative. Accordingly, the IRS's appeal is not ripe for review. The appeal is DISMISSED.
Because I would decide this case on the merits and not dismiss it for lack of ripeness, I respectfully dissent.
The majority opinion is puzzling.
Courts have invoked the ripeness doctrine and refused to decide matters which would involve "entangling themselves in abstract disagreements...." Abbott Laboratories v. Gardner, 387 U.S. 136, 148, 87 S.Ct. 1507, 1515, 18 L.Ed.2d 681 (1967). Generally, those cases involve situations with very uncertain, remote or contingent events. Dames & Moore v. Regan, 453 U.S. 654, 687-91, 101 S.Ct. 2972, 2991-92, 69 L.Ed.2d 918 (1981); Webster v. Mesa, 521 F.2d 442, 444 (9th Cir.1975) (). Courts have also relied on the ripeness doctrine in refusing to hear cases where the facts needed further development. Wheeler v. Barrera, 94 S.Ct. 2274, 94 S.Ct. 2274, 41 L.Ed.2d 159 (1974) (). Cases which do not have a concrete impact on the parties, Exxon v. Heinze, 32 F.3d 1399, 1404 (9th Cir.1994); or where administrative or governmental action is not final, Kinzli v. Santa Cruz, 818 F.2d 1449, 1454 (9th Cir.1987), have been found not to be ripe for decision.
But where the facts are clear and the district court's decision is erroneous the judiciary has a duty not to interpret the doctrinal roots of ripeness simply to avoid making a decision. Although it is now clear that the district court has abused its discretion, if the IRS proposes to transfer the case to the Criminal Investigation Division, the majority would have the Service make a second trip to this Court to argue the identical position already made in briefs and at oral argument which established the district court's error. The decision is invalid now and does not need the passage of time to enhance or remedy its invalidity. It is wrong today and it will be wrong tomorrow.
Furthermore, the ripeness doctrine recognizes that there is a need to decide a case when the prospect or fear of future events may have a real impact on the present affairs of the parties and cause potential harm. Santa Rosa Band of Indians v. Kings County, 532 F.2d 655, 657 n. 1 (), cert. denied, 429 U.S. 1038, 97 S.Ct. 731, 50 L.Ed.2d 748 (1976); Assiniboine & Sioux Tribes v. Board of Oil and Gas, 792 F.2d 782, 788 (9th Cir.1986). In this case the restrictions imposed by the District Court Order have a chilling effect on the IRS's ability to conduct effective tax investigations, particularly in the criminal context. See Herbert L. Zuckerman, Check List of Do's and Don'ts in Handling a Tax Fraud Investigation, 29 NYU Instit. on Fed. Taxation, 987, 998 (1971) (time is a taxpayer's ally). To require the IRS to provide notice of a proposed transfer to the Criminal Investigation Division and then suspend the investigation for five days would communicate to the world that a criminal investigation had ensued which certainly could impede and compromise that investigation. It does not take a soothsayer to prognosticate what would happen if the IRS decided to convert the civil investigation to a criminal one and was then required to notify the taxpayer, now a putative defendant, of such proposed transfer. The five-day waiting period would inevitably destroy the effectiveness of any contemplated confidential criminal investigative tool such as a search warrant, arrest warrant, wire interception, or the initiation of a grand jury investigation.
This case is mature, fully developed, seasoned, ready and ripe for picking.
The IRS has appealed the District Court Order adopting a Magistrate's Order that recommended enforcement of two summonses served on Laddie F. Jose as Trustee of the Jose Business Trust and Jose Family Trust, the Respondent. The IRS challenges the condition appended by the district court to the enforcement of the summonses. The court held that the IRS Examination Division was required to notify the Respondent five days in advance of circulating, transferring or copying any documents received as a result of the summonses to any other division of the IRS, including the Criminal Investigation Division.
The dispute began when a revenue agent sought to review certain documents relating to various other civil investigative issues. The Respondent submitted a copy of the trust instrument to the agent but restricted him from photocopying and disclosing it to anyone without the trustees' permission. The agent initially agreed but then returned the document to Respondent explaining that it was impossible for him to complete this investigation with such a restriction. Two IRS summonses followed and were served on the Respondent for testimony and production of documents. He refused, and the IRS brought an action to enforce the summonses. At the hearing the IRS established as required by law four criteria: (1) a legitimate purpose for the investigation, (2) an inquiry relevant to the purpose, (3) that the information sought was not already in the possession of IRS and (4) that the IRS had complied with the administrative steps required by the code. The Respondent did not dispute the agent's declaration that the summonses were for civil tax purposes, but he wanted protection in the event that the records were to be given to the United States Attorney's Office for criminal prosecution. The magistrate, however, issued an even broader order. The order precluded the IRS from circulating, transferring or copying the summoned documents to any other division of the IRS including but not limited to the Criminal Investigation Division without five days prior notice to the Respondent to allow him to dispute the proposed action. The district court adopted the magistrate's decision and found that the restriction was not excessive because it was temporary.
Importantly, the district court found that the government had met its burden of showing that the summonses were enforceable and held that they should be enforced, but also found that there was no prejudice to the government to provide notice that a criminal investigation had ensued. The opinion read that if the Examination Division of the IRS wished to circulate, transfer or copy the subject documents to any other division of the IRS, including but not limited to the Criminal Investigation Division, the IRS was required to notify Respondent of such intention, and Respondent was given five days prior to any such circulation or transfer to file and serve a motion for an order prohibiting the intended action. The district court reasoned that the restrictions against the IRS's internal use of the summoned information were justified because the statute relating to summonses "does not address whether the IRS can seek documents for one stated purpose and then transfer the documents to another division for another unstated purpose" and the restriction was temporary. In so ruling, the court held that the IRS had not demonstrated that the requirements for summons enforcement were satisfied with regard the use of the summoned information in a criminal investigation and that the Respondent was entitled to object to the use of the information should the purpose of the investigation change to a criminal one.
The summons power is an investigative tool provided by Congress to enable the IRS to discharge its duty to make determinations and assessments of all taxes imposed by the Internal Revenue Code. See Donaldson v. United States, 400 U.S. 517, 523-24, 91 S.Ct. 534, 538-39, 27 L.Ed.2d 580 (1971). If the summoned party refuses to produce requested documents the government must seek judicial enforcement. See 26 U.S.C. Secs. 7402 and 7604. This...
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U.S. v. Jose, 93-17028
...as not yet ripe because no attempt had been made to transfer the summoned documents to another division. United States v. Jose, 71 F.3d 1484 (9th Cir.1995) (Silver, J. dissenting). The Supreme Court reversed and remanded for us to consider the merits of the appeal. United States v. Jose, 51......
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United States v. Jose
...2, 1996, Decided On Petition for writ of certiorari to the United States Court of Appeals for the Ninth Circuit. Certiorari granted; 71 F.3d 1484, reversed and PER CURIAM. Petitioners, the United States of America and Leslie M. Nishimura, Revenue Agent of the Internal Revenue Service (IRS o......